The Weekly Briefing from Capital Economics

After nearly two years of monetary tightening, debate rages over whether advanced economies are heading for recession. However, as Group Chief Economist Neil Shearing tells David Wilder in this latest episode, recessions come in more flavours than the two sequential quarters of negative growth that have come to define them. Plus, in the wake of that Joe Biden-Xi Jinping meeting in San Francisco, an exclusive clip from our Drop-In briefing on global fracturing explains why a broad agreement to fix US-China economic relations looks unlikely and what the potential return of Donald Trump to the White House could mean for the structure of the world economy.And Chief UK Economist Paul Dales and Deputy Chief UK Economist Ruth Gregory are on the show to preview the Chancellor’s Autumn Statement, including the core dilemma facing Jeremy Hunt and what the OBR’s latest forecasts might signal. Click here to explore the analysis and events referenced in this podcast.

Central bankers have a tough task when it comes to communicating with markets – just ask the Bank of England’s Huw Pill, who started the week hinting at rate cuts and ended it with an insistence that the current setting has to remain in place to quash inflation. In this week’s episode, Group Chief Economist Neil Shearing delves into the challenges that central banks face in articulating policy to the market, and what lies behind the relatively hawkish rhetoric of late. Neil also talks about some of our key calls for the global economy in 2024 and discusses how concerns about debt sustainability will play out next year. The departure of three pandas from a zoo in Washington also comes up in his conversation with David Wilder as they talk through the latest on the fracturing of the global economy. Plus, Deputy Chief EM Economist Jason Tuvey is on the show to talk about Saudi Arabia in a fracturing global economy, including what’s changed in the Kingdom’s relations with Beijing and Washington and how a return of Donald Trump to the White House could affect this diplomatic landscape. Click here to explore the analysis and events referenced in this episode.

Group Chief Economist Neil Shearing is back to discuss what the recent data say about the global economic outlook – including October US payrolls and China PMIs – and what to expect from the Fed, ECB and Bank of England following their decisions to keep rates unchanged over the past week. Neil also explains why a persistent focus on the threats to humanity posed by artificial intelligence is unhelpful. Franziska Palmas from our Europe team is also on the show to discuss her worrying new forecasts for Italy’s debt ratio and whether it could be a trigger for a crisis within the euro-zone. Plus, an exclusive clip from the latest monthly Drop-In briefing in which our Asia team talks through the Bank of Japan’s next steps after that latest tweak to its Yield Curve Control policy.Click here to explore the analysis referenced in this episode.

Fed week, US economic outlook, House Speaker impact on government shutdown, Israel-Hamas war's limited effect on markets, potential decrease in bond yields and risks in financial markets.

With the 10-year Treasury yield finally hitting 5%, Group Chief Economist Neil Shearing explains the macro risks around rising bond yields, telling David Wilder what this all means for central banks.  He also talks about how policymakers manage geopolitical uncertainty in light of Israel’s conflict with Hamas and talks about how events in the Middle East fit with the idea that the global economy is fracturing into competing US- and China-led blocs. Plus, Mark Williams tackles market talk that China is dumping its dollars and Bradley Saunders discusses his recent analysis on whether AI hype is fuelling a bubble in stock markets. Click here to explore the analysis and events referenced in this episode. 

Which countries are leading the AI race? What role is AI playing amid growing strategic competition between the US and China? Does AI spell doom for EM outsourcing industries?  Moneli Hall-Harris from our Consultancy division and Deputy Chief EM Economist Shilan Shah talk to David Wilder about our AI Economic Impact Index and what its rankings say about which economies are best positioned to develop AI, but also to diffuse and adapt to the technology.  The discussion with Moneli and Shilan includes:  The AI Economic Impact Index’s unique global view of the emergence of AI;How China’s position on the Index contrasts with Beijing’s ambitions;Whether AI will help or hinder emerging market income convergence with developed economies.This is special podcast episode is part of our 2023 Spotlight project on artificial intelligence and its implications for the global economy and markets.  Explore the project, including the AI Economic Impact Index and our report ‘AI, Economies and Markets: How artificial intelligence will transform the global economy’ by clicking here.

The surprise attack on Israel by Hamas last weekend upended a lot of geopolitical assumptions, but what will this mean for the economic and markets outlook? Liam Peach, a senior economist on our Macro team, and Chief Commodities Economist Caroline Bain join David Wilder to talk through the local and regional economic risks around the conflict and the potential knock-on effects on global energy markets. Plus, Group Chief Economist Neil Shearing introduces our major new work on equilibrium interest rates, why we’re moving to a world of structurally higher rates, and what this could mean for returns from bonds, equities and a host of other assets through the end of this decade. Click here to explore the analysis and events referenced in this episode.

That September US payrolls report has triggered renewed selling in global bond markets. With yields threatening to hit fresh multi-year highs and investors scrambling for reasons behind the sell-off, Group Chief Economist Neil Shearing and Deputy Chief Markets Economist Jonas Goltermann tell David Wilder just worried we should be and what’s likely to happen next. In this special episode of The Weekly Briefing, Neil and Jonas talk through a tumultuous few weeks in bond markets, addressing the key issues around this historic rout, including: Why bond yields have risen so far in such a short amount of time;Whether yields could rise further from here;The macro fall-out from the yield surge – not least financial stability risks.

Chief Global Economist Jennifer McKeown provides a sneak peek of our upcoming Q4 Global Economic Outlook. She tells David Wilder why “higher for longer” won’t survive economic weakness and also explains why monetary tightening hasn’t had the direct and immediate impact that had been expected. Jenny also previews our upcoming work on neutral interest rates.Plus, in an exclusive clip from our recent client briefing on the Bank of Japan, Chief Asia Economist Mark Williams, Japan lead Marcel Thieliant and Senior Markets Economist Tom Mathews discuss what a Japanese rate hike could look like and how it would affect domestic and global financial markets.  Click here to explore the analysis and events referenced in this episode.

From hope to reality to hype and hysteria. The rapid development and adoption of generative artificial intelligence may be keeping headline writers busy, but is there anything to their warnings about the technology’s roll-out leading to mass unemployment? In this special episode of The Weekly Briefing, Senior Economic Advisor Vicky Redwood and Deputy Chief UK Economist Ruth Gregory discuss AI’s potential as an economic game changer and what that could mean for labour markets.  Vicky and Ruth are two of the co-authors of our Spotlight report AI, Economies and Markets – How artificial intelligence will transform the global economy.They talk to David Wilder about some of the key takeaways from their work looking at AI’s economic and market implications, including: The size and timing of the coming AI productivity boost;How AI’s productivity boost could have economy-wide effects;Whether AI will lead to a wave of “technological unemployment”.